Hollingsworth, J.R., Müller, K.H., Hollingsworth, E.J. & Gear, D.M. Socio-Economics and A New Scientific Paradigm PDF

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Hollingsworth, J.R., Mller, K.H., Hollingsworth, E.J. & Gear, D.M. Socio-Economics and A New Scientific Paradigm
SOCIO-ECONOMICS AND A NEW SCIENTIFIC PARADIGM

Rogers Hollingsworth
Karl H. Mller
Ellen Jane Hollingsworth
David M. Gear
INTRODUCTION
For several hundred years, the dominant framework shaping Western science has been the Descartes-Newtonian paradigm. This framework
was powerful in shaping the thinking of both natural scientists and social scientists. An alternative view of explaining reality has slowly been
emerging, and the influence of this new perspective has rapidly accelerated in recent decades. We focus on these two scientific paradigms,
especially the more recent one and suggest that it has considerable potential for enriching the field of socio-economics and assisting socioeconomists to understand the connections between their research and other fields of social and natural science.
The current status of socio-economics can be crudely summarized as follows: socio-economics has been quite strong in empirical and
comparative analyses and in its relentless criticism of the neoclassical paradigm, but has remained relatively weak in developing a comprehensive
theoretical alternative to the dominant neo-classical framework. A major exception was the effort by Amitai Etzioni to provide building blocks
for the ethical and moral bases of a socio-economics research program. In our view, socio-economics would benefit from theory and model
frameworks strictly independent from neo-classical rationality assumptions and situated far from neo-classical equilibrium. The emerging
paradigm heightens the potential for such developments.
Despite the theoretical weaknesses and the strong commitment to inter-disciplinarity in the socio-economic agenda, learning from other
disciplines has remained as difficult for socio-economics as for most other scientific fields. Learning from other disciplines, aside from being
intrinsically difficult even in a hybrid field like socio-economics, confronts two different types of errors. Using terminology from statistical testtheory, learning from other disciplines can produce -type errors by accepting analogies, methods or models from other disciplines which turn
out to be highly questionable and generate no cognitive value, let alone surplus value. Or learning from other disciplines may also generate type errors by rejecting highly appropriate and very fruitful analogies, models or methods from outside ones domains. Socio-economics very
seldom commits -type errors, but like most other scientific fields, has a high propensity for -type errors.
We suggest that a new emerging scientific landscape offers socio-economics the much needed theoretical alternative to neoclassical reasoning.
Using perspectives and concepts developed by the natural sciences during the past half-century, socio-economists can uncover new models and
theoretical components with which to engage in theory construction independent of the classical Descartian-Newtonian paradigm. As well,
socio-economists have potential to advance the theoretical insights of their natural science colleagues, so that there is the potential for more
serious interaction among social and natural scientists.
The Transition from Science I to Science II
This paper focuses on the fundamental re-organization and re-configuration of scientific knowledge which is rapidly occurring. Building on
insights by Nicholas Rescher (1978), we realize that by the 1950s a new phase had emerged in the structure and organization of scientific
knowledge, a phase with the potential for dramatically altering interdisciplinary learning across both the natural and social sciences.
For several hundred years, much of Western science has been influenced by a fundamental distinction, a leading metaphor and a dominant
paradigm. The core paradigm was described in Thomas S. Kuhns Structure of Scientific Revolutions and was based on the Principia
Mathematica (1687) by Isaac Newton. The fundamental distinction and leading metaphor for the Newtonian paradigm had already been
proposed by Ren Descartes. In his Meditationes de Prima Philosophia, Descartes constituted two ontological kingdoms, res extensa for
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the natural world and the natural sciences and the other one for mental substances (res cogitans). This kind of Descartian dualism paved the
way for separating science into two fundamentally different cultures, operating on two sets of principles, criteria and goals. With the rapid
differentiation of scientific disciplines during the nineteenth century, many philosophers and scientists addressed the cognitive distances and gaps
between the natural universe and the mental or social universe and their corresponding scientific matrices.
For Descartes, the dominant metaphor for the natural world became that of a machine as put forth in Part IV of his Discourse on Method.
While his metaphor was originally presented as a way of understanding living things, over time it has been generalized to be a view about the
entire world. Descartes metaphor has been interpreted not only as a description of how the world operates but as a prescription for how to
study the world. Adopting his mechanistic view, we have all too often adopted an overly simplified view of the world, of the relation of parts to
wholes. Scholars have even extended the metaphor to that of an engineer, a watch-maker or a designer.
Turning to the cognitive organization of the Newton-Descartes paradigmto the period we term Science Iits characteristic features can be
captured by a hierarchy of levels both in the scientific domains and in the socio-natural universe (see Table 1). The leading epistemological
vision within the Science I paradigm lies in its heavy emphasis on reductionism.
TABLE 1: DIFFERENCES IN THE PARADIGMS OF SCIENCE I AND SCIENCE II
Science I
Dominant Paradigm
Theoretical Goal
Theory Structures
Classical Physics
General, Universal Laws
Axiomatic, Reductionist
Science II
Evolutionary Biology,
Science of Complexity
Pattern Formation,
Pattern Recognition
Phenomena Nested in Multiple Levels
of Reality Simultaneously
Forecasting Capacities, Ability to

Make Predictions
High
Low
Complexity
Low
High
Dualism
Emphasis on the Interconnectedness of

Phenomena
Ontology
(res extensa/res cogitans)

Leading Metaphors
Clocks
Complex Networks, Living Cells, Clouds
Cognitive Distances between Social

Science and Natural Sciences
High
Medium
Inspirational Scientists
Ren Descartes, Isaac Newton,

Adam Smith
Charles Darwin, Ilya Prigogine, Gerald Edelman
For example, societies are built up from individuals, individuals from cells and their neural organization, cells from molecules, molecules
from atoms and atoms from a small set of elementary particles. The key to understanding reality is to comprehend the parts of a system, and
how they operate together. Finally, the dominant theory formation in the Newton-Descartes paradigm lies in the identification of universal laws
and the clustering of universal laws. This mentality suggests that we can understand the interactions among variables and that only a relatively
few variables need be manipulated to change nature or a societys history (Hollingsworth, 2006).
Even though the visions are often grand, the mentality is that of the engineer with an emphasis on efficiency and redundancy: design projects
as simply as possible and keep interactions among the necessary parts to a minimum. When the engineering mentality shapes policy or designs
projects, logic is expected to prevail, but for failsafe purposes, designers usually include in their plans some redundancy (i.e., the performance of
the same function by similar elements). Whether the project is built from the ground up or whether there is a great deal of bricolage or
incrementalism, the mentality of the design is to keep the components or plan as uncomplicated as possible. In very complex and sophisticated
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projects, there is some feedback modeling or other elements from control theory, but at all stages of the design, irrelevancy is to be avoided.
Each part is designed to complement the next part.
Contrary to the Cartesian design, a massive re-configuration has been emerging for approximately 150 years, starting with the Darwinian
Revolution in the middle of the nineteenth century, accelerating from the 1950s onward toward a new science regime here labeled Science II. In
Science II, a broad range of trans-disciplinary foundations have led to a fundamentally new scientific paradigm with a complex configurative
structure. Science II is not grounded on engineering and clockwork metaphors but is primarily concerned with an effort to comprehend both the
natural and the social world in terms of evolution, complexity, self-organization, population dynamics, innovations, etc. Whereas a view of the
world shaped by the influence of Newton and Descartes is comparatively tidy and predictable, the new configuration emphasizes the complexity
and unpredictability of the world, open to many more possibilities (Kauffman, 1992).
The new perspective became increasingly widespread after physicists and computer scientists began to demonstrate in the 1960s and
1970s that even simple equations can produce results which are essentially unpredictable. Advances in genetics and neurosciences have also led
to conceptions of science which increasingly emphasize the important role of chance and unpredictability in explanation (Edelman, 1987). The
notions of general laws or axioms have been recast within the Science II world by notions like pattern formation and/or pattern recognition
(Barabsi, 2002). Over the past two decades, specialists in discipline after discipline have increasingly recognized that the world is far more
complex than hitherto recognized. In the words of the economist Brian Arthur, more and more scientists realize that logic and philosophy are
messy, that language is messy, that chemical kinetics is messy, that physics is messy and finally that the economy is messy (quoted in Waldrop,
1992: 329; see Lewin, 1993). The new scientific paradigm so rapidly diffusing across academic disciplines suggests that the world does not
change in predictable ways (Mayr, 1991). Systems have an inherently nonlinear dynamic quality to them. The games in which actors are
engaged are ever changing, and even in the same game, the rules keep evolving. In short, there is an enormous amount of chance in shaping the
world. There is a great deal of co-evolution in the world, in which very small changes can have major long-term consequences. Science II
analysts often engage in case studies over long periods of time and report a great deal of contingency and chance in explaining outputs. Too,
effort to engage in theory construction lie not only in the construction of patterns but also in much weaker requirements for scientific explanations
than in the Descartes-Newtonian paradigm.
Three scientists whose work very much inspired and embodied the Science II paradigm were Charles Darwin, Ilya Prigogine (physicist and
Nobel laureate), and Gerald Edelman (also recipient of a Nobel Prize). Unlike the static equilibrium and universal laws in the DescartesNewtonian paradigm, Darwin, Edelman, and Prigogine emphasized the importance of dynamic analysis, the uniqueness of historical events, the
irreversibility of social and natural processes, and the difficulty of making successful predictions in complex systems. All three understood the
importance of retrospective analysis in order to understand reality (Prigogine and Stengers, 1997).
In the Science II paradigm, scientists search for regularities within systems, but unlike neo-classical analysts they view systems as tending to
move far from equilibrium. Because a system is always changing, at some point it evolves into what appears to be a new system. Science II
rejects the idea that reality can be explained with determinism, linearity, and certainty. Darwin and Prigogines methodological and theoretical
frameworks argued that historical analysis was central to scientific understanding (Wallerstein, 2004). Some of the implications from John von
Neumanns work have advanced the theory of complexity: the idea that systems with a large number of interacting parts are open to their
environment and have self-organizing internal structures (Waldrop, 1992; Macrae, 1992). Von Neumanns work has had enormous impact on
the field of socio-economics as well as biology, geology, meteorology, and computer science. A central tenet of much of complex systems
analysis is that large-scale collective behaviors result from repeated nonlinear interactions among constituent parts, whereby wholes tend to be
much more than the sum of their parts (Bunge, 2003). Increasingly analysts maintain that most complex systems are not susceptible to
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mathematical analysis. In the science of mathematical algorithmic complexity, complex systems must be understood by letting them evolve
either in time or with simulation analysis (Newman, Barabsi, Watts, 2006). In short, the evolution of complex systems is inherently
unpredictable (Sornette, 2003: 1517; Chaitin, 1987; Pines, 1986; Mayr, 1991).
Numerous Science II analysts have observed that in many systems some of the same functions are performed by similar structures
(redundancy). Others point out that many systems are characterized by degeneracy, in which structurally different elements lead to the same
output (Edelman and Gally, 2001). More and more socio-economists are recognizing that at different moments in the same society, the same
structure can be associated with a different output or performance, and on the other hand that across societies, different structures are
associated with the same output or performance.
SOCIO-ECONOMICS IN THE FRAMEWORK OF SCIENCE II
For several reasons, in Science II the potential for major theoretical advance in socio-economics has increased dramatically. First, unlike
Science I, the cognitive distance between the dominant paradigm and socio-economics is now quite modest, suggesting that socio-economists
have potential to contribute to and borrow from theoretical insights and models developed in other fields. Socio-economics has enhanced
capacity to adapt to the rapidly developing new methods, models, and tools necessary for the explanatory side of pattern recognition and
pattern formation. Second, the stock of available models and mechanisms within the Science II paradigm reflects a steep increase in complexity
and is focused predominantly on process dynamics and evolutionary perspectives, quite compatible with socio-economists interests. Third, the
interaction and communication among analysts in various fields of science is rapidly increasing due to the emergence of commonly shared
information and communication technologies. Exchange between natural science and social sciences could be much richer if they increasingly
recognize that they are working on common problems.
Common Metaphors
As we interact with natural scientists about our research agenda for socio-economic theory building, we realize that many major advances
in knowledge have been based on individuals thinking metaphorically. We offer three recent examples: Gnter Blobel was awarded the 1999
Nobel Prize in Physiology or Medicine for his work in cell biology, built metaphorically on the idea of a postal system in human cells which
sends and receives messages. In 2003, Peter Agre and Roderick MacKinnon received the Nobel Prize in Chemistry for demonstrating how
materials are transferred across cell membranes by structures which resemble the architecture of water channels. And a few years earlier, John
Walker in Cambridge (U.K.) received the Nobel Prize in Chemistry for demonstrating how movement within cells resembles the transport
system in a modern economy.
We are optimistic that by thinking in common metaphors and borrowing insights from our colleagues, we are likely to have richer
perspectives. But we must always be conscious that metaphors are never complete, precise, or literal mappings (Hodgson, 1999: 68).
Common metaphors like self-organization, self-assembly, emergence, order from chaos, life at the edge of chaos, path-dependency, punctuated
equilibrium and many others are useful as tools for developing new insights. They can be a key vehicle by which ideas and models from one
scientific discipline may be transferred to another so long as we engage in rigorous and deep thinking in order to refine our new perspective
(Brown, 2003; Mayntz, 1992; Maasen and Weingart, 2000).
Shared Methods and Models
It is important to note that transfers of models and methods within the new perspective are not restricted to a one-way flow from biology
or physics to socio-economic domains, as there are flows from the social sciences to natural science. The ideas of The Theory of Games and
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Economic Behavior by John von Neumann and Oskar Morgenstern (1944), originally conceived as a radical revolution for economic theory,
rapidly diffused into biological and other sciences (Lewontin, 1961). Mitman (1992) brilliantly demonstrated how entomologists borrowed
models from social scientists who studied social cooperation and associations in order to understand the social behavior of insects. In recent
decades, various complex models and/or methods have moved from their original domain to a wide spectrum of disciplinary fields in both the
natural and social sciences. For instance, Gerald Cory and others are working to integrate evolutionary neuroscience with social exchange and
economics, trying to understand human sociality from the standpoint of physiology (Cory, 2006; Levine, 2006; Wilson, 2006; Lynne, 2006).
Entire new institutes and research programs have emerged which focus on problems of common interest to both natural and social scientists.
One of the most visible has been the Santa Fe Institute in New Mexico, involving some of the worlds most prominent physicists, biologists,
sociologists, economists, and anthropologists (Waldrop, 1992).
EXAMPLES OF SOCIO-ECONOMISTS AND NATURAL SCIENTISTS WORKING ON COMMON PROBLEMS
For illustrative purposes, we briefly discuss four general types of issues in which socio-economists are working with or parallel to their
colleagues in other fields. These are (1) multi-level analysis, (2) the general binding problem, (3) the structure and dynamics of complex
networks, and (4) power-law distributions.
1) Multi-level Analysis
In most every field of science, one of the major concerns in recent decades has been to overcome the tendency to engage in microreductionism. Wise investigators are reductionists only to obtain points of entry to complex systems. They are very much aware that parts or
individuals are embedded in complex environments. As scientists have become more sophisticated, they have engaged in a great deal of thought
about causes and effects across different levels. In biology, a scientist may be a specialist in molecular biology but also concerned with
phenomena ranging from subatomic particles to the global environment. Although most scientists become specialists at one level of analysis,
E.O. Wilson of Harvard and Nobel laureate Gerald Edelman are examples of how good scientists attempt to understand how phenomena at
one level are constrained by or interact with phenomena at other levels (Wilson, 1998; Edelman, 1987).
Similarly, the social sciences in recent years have been increasingly involved in multi-level analysis. In social sciences too, there are various
multi-level investigations, some of which are illustrated in Table 2. The table presents two different approaches by social scientistsone for
spatial arrangements in political systems and the other for individuals and structures in entire social systems.
TABLE 2: EXAMPLES OF MULTI-LEVEL ANALYSIS*
Social Sciences
Feedback
Spatial Analysis
Structural Analysis
Global
Rules, Norms, Habits, Conventions, etc.

(Institutions)
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Transnational Regions (e.g., European Union)
Institutional Arrangements (Markets, Hierarchies,

States, etc.) and Institutional Sectors (Financial,
Educational, Business, Research Systems, etc.)
Nation State
Organizations, Firms
Subnational Region
Small Groups, Families
Local Level
Individuals
* It is assumed conceptually that each level influences all levels below it, and that there is feedback among all levels.
Most scientists, whether social scientists or natural scientists, center their research on only one level; very few systematically conduct
research at multiple levels (for an exception, see Burns and Flam, 1987). However, scholars working on one level have better opportunities for
rich scholarship if they are sensitive to and communicate with scientists who work at other levels. For examples in the field of socio-economics,
see Boyer and Hollingsworth (1997).
2) General Binding Problem
One of the most common issues confronting scientists in many fields is The General Binding Problem, concerned with why different types of
phenomena are attracted to each other, how strongly and for what duration they are attracted, and what consequences ensue. Both natural and
social scientists have addressed this problem.
In the field of socio-economics the general binding problem has been recently raised in the guise of complementarity. Colin Crouch, former
President of the Society for the Advancement of Socio-Economics observed that socio-economists and natural scientists were both wrestling
with the general binding problem when he pointed out that a good bit of the literature on economic governance encompasses some of the same
reasoning in which chemists and biologists have engaged when they have used the concept complementarity (Crouch, 2004; Crouch et al.,
2005). Implicit in Crouchs analysis was that socio-economists and natural scientists had shared views of complementarity. To Crouch,
complementarity exists when two or more dissimilar actors/agents (e.g., firms, institutions, macromolecules, etc.) are parts of a relationship due
to underlying logic or rules, non-random in nature. This type of relationship is threatened by instability because of both endogenous and
exogenous forces. There is varying strength of the constituent parts of the configuration, and among the constituent parts, there is often mutual
compensation for deficiencies: where one is weak, the other may be strong. Two key theoretical problems with this approach have been what
keeps the constituent parts of the configuration together, and how and why parts come into relationships in the first place.
The individual from whom some theorists on socio-economic governance (Hollingsworth and Boyer, 1997) have derived considerable
insight and inspiration was the Caltech chemist and Nobel laureate Linus Pauling, certainly the most creative scientist in the U.S. and probably
the most important chemist of the twentieth century. Just as some theorists of economic governance have long been interested in the logic by
which a particular type of market coheres to a particular type of state, associative system, etc., Pauling addressed a comparable problem, trying
to understand the logic with which atoms of particular molecules would bond to each other, why the bonding of particular molecules was loosely
or tightly coupled, and with what consequences.
Perhaps Paulings most significant contribution to chemistry was his theory of chemical bonds and complementarity. His approach to
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bonding in terms of complementarity was first introduced into the chemistry literature in 1940 in a very significant paper co-authored with the
German physicist, Max Delbrck (later recipient of a Nobel Prize). Pauling and Delbrck wrote that in order to achieve maximum stability, two
molecules must have complementary surfaces, like die and coin (Pauling and Delbrck, 1940). The idea that atoms from dissimilar molecules
would be attracted to each other became a key component of bonding and complementarity in modern chemistry and biology. Later, the logic
embedded in the Pauling-Delbrck paper about bonding and complementarity provided the key insight for Crick and Watson to solve the
structure of DNA.
One example of binding among mutually exclusive elements is found in twentieth century immunology. Scientists long suggested that
antigens and antibodies were attracted to each other like a lock and a key. Indeed, it was in antigen-antibody reactions that complementarity
often received the most attention. Biologists had argued that an antigen and antibody were attracted to each other because there was a
complementarity in the way that their shapes fit or complemented one anotherin much the same way that a lock fits or complements the key
for which it has been designed. In the metaphor, the antigen was the lock and the antibody the key (Serafini, 1989: 99100).
Niels Jernes Nobel Prize-winning work on bonding and complementarity between antigens and antibodies is especially suggestive for
socio-economists who address why particular governance structures are attracted to one another. Just as there is not a precise, one-to-one
relationship between any particular type of state, market, or associative structure, so Jerne found that an antibody does not have to fit precisely
to the antigen to have an affinity. In short, a key doesnt have to fit 100 percent to open a lock. The same key can fit multiple locks.
(Sderqvist, 2003: 177; Jerne, 1993). In nature, there are no perfect fits between antigen and antibodies; in the social sciences we find that
there is no perfect fit among different governance structures.
Socio-economists work on capitalism includes analyses of why different institutional arrangements (e.g., forms of governance) bond to
each other (Hollingsworth and Boyer, 1997; Hollingsworth, Mller and Hollingsworth, 2002; Hollingsworth, Schmitter and Streeck, 1994;
Nelson, 1993; Whitley, 1998). This work argues that there are a number of modes of governance (markets, types of hierarchies, networks,
associations, state structures, communities, and clans) for coordinating relationships among various economic actors. Though each of these
seven governance modes has its own distinctive logic, none exists in a pure or ideal form. Each is to be found only in some kind of combination
relationship with other modes of governance. In other words, discrete governance modes exist in relationship with each other, often in unstable
configurations. Because each type of governance may exist in combination with many other types, the number of possible combinations is very
large. Even so, the number of possible combinations is much smaller than those which computational biologists are facing (Kitano, 2002; Hood,
2003).
There are several critical theoretical issues about the binding of different governance arrangements for which we have poor answers in the
social science community.
(1) What is the logic by which one type of governance is attracted to another or repelled? Is there a logic by which one kind of
market ends up in a configuration with a particular type of state, a particular kind of association, etc.?[1]
[1] It is not as though this is a neglected research problem in the social sciences. Wolfgang Streecks work on the associations of workers and
business interests is certainly noteworthy in this respect.
(2) What is the logic by which governance configurations are tightly coupled or bonded in some societies, while elsewhere they
are loosely coupled? Why is there variation in the coherence of governance structures, both within and across societiesa theme
prominently discussed in some of the varieties of capitalism literature as well as in the literature on governance of different sectors in
the same country (Campbell, Hollingsworth, Lindberg, 1991; Herrigel, 1996).
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(3) What is the logic for understanding governance structures at different levels of the social world? Boyer and Hollingsworth
(1997) have emphasized that one of the most complex issues is to understand the complementarities of governance structures at
each level of the social world, how each level interacts with others, and with what consequences.
Even though scientists in different fields work on common problems and can derive insights from one another, scientific explanations are
essentially specific to the phenomenon to be explained. As Bunge observes there are no all-encompassing explanations because there are no
one-size-fits-all mechanisms (Bunge, 2003: p.22).
Focusing on how the constituent parts of societies emerge together, some scholars have long been concerned with the processes of nation
and state building (Hollingsworth, 1971; Grew, 1978). Economists have been concerned with the processes of mergers and acquisitions of
firms (Williamson, 1985). Moreover, some socio-economists have written stimulating studies about the conditions under which capitalists and
workers organize (Streeck and Schmitter, 1985). Theorizing about how bonds hold phenomena together is only one side of the coin. The
binding problem also concerns the process by which things come apart, and this concern cuts across many disciplines. Thus, physicists and
chemists have long focused on the process by which solids break down, for decades using chromatography to separate compounds into
constituent parts. In the social sciences, scholars have been fascinated with the breakdown of empires and statese.g., the downfall of the
Roman Empire, the downfall of the British Empire, the disintegration of the Soviet Union (Kennedy, 1987; Beissinger, 2002).
3) The Structure of Complex Networks
In recent years, one of the most common subjects drawing the attention of physicists, biologists, computer scientists, and social scientists
has been the study of complex networks. Of course study of networks is not new. Whereas most of the older work on networks was essentially
descriptive and static, the new science of complex networks is highly theoretical, with a great deal of empirical analysis. The new scholarship
engages in dynamic analysis, tends to observe phenomena in a continuous state of change, and analyzes complex networks as evolving
structures. The scholarship reports that most complex networks are not developed by designers or engineers but have been unplanned, very
decentralized, self-organizing, and emerged over long periods of time.
In contrast to traditional reductionists and some early students of networks, the current group of complex network analysts tends to think
that nothing happens in isolation. We live in a small world in which everything is linked to everything else (Barabsi, 2002; Watts, 2003). In the
new literature, the structure of complex networks is the key to understanding much of the world around us (Barabsi, 2002). The scholarship
suggests that the difference between things not in networks and parts of networks is very subtle. Networks are analyzed as part of a system,
and the analysis methodologically is quite anti-reductionist. As analysts have studied how complex networks evolve, they conclude that they are
self-organizing, not steered or directed by some external system. They emerge from a disordered collection of interacting parts. .
Those who study complex networks describe two types: the aristocratic type and the egalitarian type. Both networks have many different
nodes, but the aristocratic type network has a few nodes connected to many other nodes. This type of network is characteristic of the worlds
aviation system. Globally, there are a few major hubsairports such as Chicago OHare, London Heathrowwith each having links with
hundreds of smaller airports, but each smaller airport is linked to relatively few other airports. Alternatively, there are egalitarian type networks
in which each node has only a few links to other nodes, but none has numerous links to others. It is the aristocratic type network which has
been of greatest interest to social scientists engaged in the new science of networks (Watts, 2003, 2004; Sornette, 2003).
Some of the foundation of the new science of networks in the social sciences was prepared by Robert Mertons famous paper on The
Matthew Effect in Science (Merton, 1968), Herbert Simons celebrated work The Gibrat Principle, and Derek John de Solla Prices
argument about cumulative advantage in science. Merton quoted from the New Testament Gospel of Matthew For unto every one that hath
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shall be given, and he shall have abundance; but from him that hath not shall be taken away even that which he hath, and argued that rewards in
science go to those who already have rewards, and they continue to receive more and more, while those who are unrecognizedeven if
deservingremain unrecognized. Mertons analysis was a variant on that of Pareto (1896) some years earlier: the rich tend to get richer,
generally at the expense of the poor. Herbert Simon (1955) demonstrated that business firms grow in a more or less random fashion but their
probability of growing is proportional to their current size. At about the same time, Simon Kuznets received a Nobel Prize in economics for
demonstrating a similar principle about the distribution of income within countries. Price, in a famous paper which laid the foundation for the
study of networks in citation of scientific papers, was one of the first to demonstrate that the pattern of citing scientific papers has a network
type structure, that papers receive citations in proportion to the number they already have. He labeled this process cumulative advantage
(Price, 1963; Newman, Barabsi, Watts, 2006: 1718).
As the new science of networks has emerged, there has been considerable emphasis on two underlying principles: growth and preferential
attachment. A node with more links than any other is far more likely to continue growing new links with other nodes. The older nodes have
distinct advantage over more recently established nodes. For example, urban geographers have observed that there is a systematic rank
ordering of cities whereby large cities are more likely to attract new arrivals than small cities.
One of the most interesting findings of the new science of complex networks is that two micro-rules (growth and preferential attachment)
appear to be both necessary and sufficient to generate highly ordered macro-behaviors across a variety of heterogeneous domains. The work of
Merton, Simon, and Price did not deny the importance of historical specificity in explaining the original success of a scientists discovery or
paper or the merits of a particular firm. Rather the idea is that regardless of the specific reasons for initial success, the successful are more likely
to continue reaping more rewards than the less successful. The rich have many ways of getting richer, some deserved and others not, but as far
as the resulting statistical distribution is concerned, the significant thing is that they continue to prosper relative to others (Watts, 2003: 110
111).
Networks, whether aristocratic or egalitarian, are subject to change due to internal and external conditions. Internal network mechanisms
may become overloaded, as nodes cannot integrate and exchange new information. External conditions may overwhelm the network and
change previous patterns of growth and preferential attachment. Some of these changes, especially in aristocratic, small-world, networks may
be so extreme that they destroy the nodes with the most attached links, especially if they are tightly linked to each other, and the shape of the
network changes profoundly. Egalitarian networks are less subject to such extreme fluctuation.
Aristocratic, small world networks are in a sense more vulnerable, in that they occasionally experience what are known as tipping points,
the points at which the collective organization of phenomena change. Tipping points are critical states of change in part related to the node
relationships and their distribution. Among financial institutions, the failure of a large organization with many network links can induce so much
turbulence that a whole network can fail. The failure of a large financial institution could thus represent a tipping point, destroying the whole
system. It is with these insights that analysts in the new science of networks are able to explain crashes in stock markets going all the back to
the tulip mania in the seventeenth century, even the crashes that happen on the Internet, the contagion effects with fads in fashion, book
publishing, the media, and the spread of disease (Sornette, 2003; Pastor-Satorras and Vespignani, 2001, 2004).
4) Power-law Distributions
Scientists long believed that most observations in the social and natural world were distributed in a bell-shaped curve, alternatively known
as a Gaussian curve. Most social scientists have long assumed that most things fall within a normal distribution in which things have a well
defined average. A bell shaped curve has a sharp peak, which rapidly tapers off on each side (Figure 1.1). This kind of curve is so widespread
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that scientists refer to it as a normal distribution. Observations are assumed to be independent of each other. A common example of a bell
shaped curve is the distribution of the height of males in a population. Most males would be between five and six feet tall and there would be a
peak value, with people scattered on either side of the peak. However, many analysts have long realized that distributions do not always follow
a normal curve. Many distributions and patterns are non-linear, and there are many types of non-linear distributions.
With the emergence of Science II, analysts across different disciplines began to observe that the characteristic distributions in selforganizing processes often have power-law distributions. Indeed, analysts in the new science of networks have discovered that power-law
distributions are far more pervasive in the social and natural world than previously thought. As we observe in Figure 1.3, power-law
distributions do not have a peak at their average value. Rather, the distribution begins at its maximum value and then decreases steadily.
Moreover, power-law distributions have a clear asymmetry between a small number of high values and a large number of low values. Thus, as
examples of Figure 1.3, there are very few individuals with extreme wealth, while most individuals have very little wealth.
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Analysts generally portray a power-law distribution as shown in Figure 1.4. The key factor in a power-law distribution is a quantity, the
exponent, which describes how the distribution changes as a function of the underlying variable. A distinguishing feature of a power-law
distribution is that when plotted on a double logarithmic scale, it appears as a straight line with a negative slope (Figure 1.4). This contrasts with
a normal distribution plotted on logarithmic scales (Figure 1.2), which curves sharply downward to a cutoff value, quickly reaching zero. The
power-law distribution has no such abrupt cutoff (Watts, 2003: 104107; 2004: 250). As an illustration, complex networks with a power-law
distribution have numerous nodes with few or no links and a small number of nodes with large numbers of connections.
Many disciplines in the natural and social sciences have discovered that there are vast amounts of reality in which things are distributed in a
power-law distribution, and this has had a startling impact on the way that analysts in the new science of networks have begun to study
phenomena. Network analysts have demonstrated that power-law distributions occur in many different kinds of phenomena other than
distributions of city size, wealth, scientific citations, scientific rewards, but also in the severity of wars, the frequency of use of words in human
languages, the number of papers scientists write, the number of hits on web pages, the sales of books and music recordings, cell metabolism,
and a variety of other phenomena with phase transitions in the natural world (Newman, Barabsi, Watts, 2006).
CONCLUDING OBSERVATION
Our discussion of the search process in the new scientific knowledge base has brought to light several areas of research
going on across many scientific domains, in particular common problems which have high relevance to socio-economics. We
hope, returning to a terminology introduced at the beginning of this paper, that in the course of our explorations no serious type error has been committed. Rather, we think that by introducing complex networks and their potential extensions as well
as a specific socio-economic network agenda, we have helped to eliminate a potentially large -type error. As we undertake
active transfers of the ever-expanding stock of common problems, metaphors or methods and models used by natural and
social scientists as part of our socio-economic research strategies, we should substantially advance our understanding of
social reality. In this way we could contribute to diminishing the cultural divide between the natural sciences and the rest of the
world which C.P. Snow and others have found so frustrating.[1]
[1] C.P. Snow was a British physicist, novelist, and administrator who became a scientific advisor to the British government in
World War II. He is well known for his book about science and literature, The Two Cultures and the Scientific Revolution
(1959). In it he argues that practitioners in each of the two fields know very little about the other and there is little
communication among them.
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SOCIO-ECONOMICS AND A NEW SCIENTIFIC PARADIGM

Forecasting Capacities, Ability to

Emphasis on the Interconnectedness of

(res extensa/res cogitans)

Complex Networks, Living Cells, Clouds

Cognitive Distances between Social

Ren Descartes, Isaac Newton,

Charles Darwin, Ilya Prigogine, Gerald Edelman

Rules, Norms, Habits, Conventions, etc.

Transnational Regions (e.g., European Union)

Institutional Arrangements (Markets, Hierarchies,

Small Groups, Families

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